Ethereum was launched in mid-2015 and since then has attracted the attention of investors, developers and enthusiasts. This cryptocurrency is based on blockchain technology, similar to Bitcoin technology, but with additional "gas". Thanks to this, Ethereum can provide more efficient and secure services.
Today we will conduct a detailed analysis of the situation in the Ether (ETH) market, touch on the topic of why it will remain a leader in its niche, and discuss the six stages of Ethereum's development and what consequences they bring.
Ethereum Development Roadmap
The Ethereum Development Roadmap is a blockchain "strategy" released by Vitalik Buterin in 2014. Its main goal is to create a decentralized, censorship-resistant blockchain platform that could support smart contracts, dApps and other applications. It's like a game of Tetris: it's hard to tell what's happening now, but it's easy to see how things will look in the future. Therefore, the roadmap has undergone changes since 2014, and now the development of Ethereum is divided into 6 parts.
1. The Merge
This is the first, and so far the only, completed stage. It took place on September 15 and became a great victory not only for Ethereum, but also for cryptocurrencies as a whole.
What exactly happened? There was a transition of the current network from Proof-of-Work to Proof-of-Stake. That is, now there is no need for miners and their farms, because the coordination of blocks will now be ensured by validators whose coins are locked in staking. And this is a huge breakthrough.
First of all, no one has ever tried to turn anything even remotely similar to this before. In fact, this process can be compared to a complex operation: you need to take the heart of the blockchain, operate on it and put a new one.
Second of all, it solved the problem of colossal energy consumption. Before The Merge, the Ethereum blockchain consumed as much electricity as an entire developed country (such as Chile). Now world consumption has decreased by 0.2%!
Therefore, the launch of the Ethereum 2.0 network can be called a success. However, with the advent of Proof-of-Stake, Ethereum has become highly centralized. 49.5% of all network nodes are located in the US alone, and these nodes are hosted by a single provider: Amazon Web Services (AWS). This situation is problematic because it means that a third party (the US government) can remove them from the network with minimal effort.
So the following steps come into play.
2. The Surge
At this stage, the focus will be on improving scalability and privacy. The first step of this plan is Proto Danksharding: the ability for Ethereum to have blocks of data transparently integrated into nodes and their operations. According to Vitalik Buterin (founder of ETH), after completing this stage, Ethereum will be able to scale up to 100 thousand transactions per second.
3. The Scourge
This is a new chapter in network decentralization. The idea is to delegate the creation of blocks and the proposal of new blocks to different parts of the network, avoiding one validator having power over both tasks.
4. The Verge
The Verge integrates Zero-Knowledge Proof technology into Ethereum's transaction verification system to make it faster and more transparent.
1) Implementation of Vercla trees, which will help Ethereum take up less disk space thanks to its blockchain.
2) Improvement of zk-EVMs, which increases security and improves data storage.
5. The Purge
The main task of this phase is to make the Ethereum network more portable and simpler. This should be a solution to one of the biggest problems: blockchain size is growing too fast and synchronization is too slow. That is why this stage was called "cleaning". In simple words, you need to "clean" old data from the hard disk.
6. The Splurge
It's a tail clipping. Everything that was not fixed during the previous phases will be fixed here.
It is possible that Vitalik Buterin plans to solve the rest of the blockchain's shortcomings within the next two years. The benchmark is 2025. The year all these features will be inside Ethereum.
2022 was definitely a year of disappointment. We confidently entered the "crypto winter" and survived the losses. The price of almost all cryptocurrencies fell, and ether was no exception. However, an interesting trend can be traced with it. As the price drops, ETH staking is slowly but surely increasing.
“While the total stake in Ethereum is currently around 14.44M ($19.5B), ETH staking will exceed 1.096M in the next quarter alone, a sign that traders see it as a solid alternative to traditional markets”, - said Alan Goldberg, BestBrokers market analyst.
And this is a good trend with which we enter 2023.
Interest of institutional investors
According to Bernstein and other crypto players, Ethereum has become a leading asset in the digital economy. The cryptocurrency's market capitalization and liquidity have made it attractive to institutional investors. The success of The Merge has not gone unnoticed, so despite the volatility of the market, many are beginning to look at ether as a potential long-term investment.
2022 was an interesting and, despite everything, a successful year for Ethereum. It will be interesting to watch further developments and at what pace new phases will be introduced.
If you are interested in ether, we have a separate article about its purchase. Follow the link to learn how to easily and quickly buy cryptocurrency.